Going as friends usually is an unfortunate scenario for one party and just ok for the other. It is when (usually) a guy asks a girl that he likes on a date. But for this poor soul the girl only sees him as a friend. She will accept but as to negate the guy having any thoughts of making any sort of romantic move she labels it as going as friends. The guy, even though in the long run it is bad for him, accepts as to just get to spend time with her. This occurs commonly when a party has been placed in the friendzone.

This scenario could be reversed where the girl is the guy and the guy is the girl.

random girl "you and kate are so cute together you would make a great couple, you should ask her to prom"
guy "I did, she said yes. We are going as friends"
random girl "Congratulations!"
guy's guy friend "sucks bro"